Alphabet, Google’s parent company, is in advanced talks to acquire Wiz for $23 billion, a person close to the company told TechCrunch. The deal discussions were previously reported by the Wall Street Journal.
Wiz, a cybersecurity startup founded in 2020, was approached a few weeks ago by Thomas Kurian, head of Google’s cloud division, the source said. Since then, negotiations proceeded quickly and the two parties tentatively agreed on the purchase price.
The person said that a deal of this magnitude faces many hurdles and details that would have to be sorted out, but didn’t specify what the hurdles are. Deal negotiations could take another week to 10 days and have a 50% chance of falling apart, according to the source.
The offered price would more than double Wiz’s last private valuation of $12 billion, which the company achieved in May when it raised a $1 billion Series E.
Wiz has been growing astronomically fast. The company reached ARR (annual recurring revenue) of $100 million a mere 18 months after its launch, making it one of the fastest-growing companies ever. In May, Wiz announced that its ARR was in the $350 million range. Its growth has only accelerated since then. Today, the ARR stands at $500 million and it plans to hit ARR of $1 billion next year, the person said.
Given its fast growth, Wiz has always intended to take itself public but wasn’t planning to launch its offering this year or in 2025. The company wasn’t looking for a buyer until Google approached it.
However, Google Cloud may provide Wiz with strong revenue synergies, which means Wiz may have a better chance of selling its product to the tech giant’s customers.
If the deal is reached at $23 billion, it would value Wiz at 46 times its current ARR and 23 times its projected 2025 ARR. In comparison, Wiz’s main competitor Palo Alto Networks is trading at just above 14 times its trailing twelve months revenue. Google appears ready to pay a nearly 300% premium to Wiz’s closest comparable.
Wiz’s backers include Andreessen Horowitz, Cyberstarts, Index Ventures, Insight Partners and Sequoia.